Safran reports strong financial results despite 737 MAX impact

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French aerospace group Safran saw its operating income increased by more than 35% in the first half of 2019, despite the impact on Leap engine deliveries caused by the Boeing 737 MAX grounding. The company raises its annual revenue forecast but remains cautious.

“H1 results have confirmed the trajectory of vigorous growth observed in Q1, with very strong revenue and profitability increase trending above initial full-year guidance across all divisions,” commented CEO Philippe Petitcolin in an official statement.

Safran now expects to see its adjusted revenue “grow by about 15% in 2019” compared to 2018, an improvement from previously expected 7% to 9%. Adjusted recurring operating income should increase by more than 20%, compared to 10% to 12% before.

However, the manufacturer expects to see the Boeing 737 MAX situation affect its finances in the second half of the year. The decrease of pre-payments for future deliveries should impact free cash flow by €300 million per semester.

Safran is part of CFM International, a joint venture with GE Aviation. The company produces the LEAP-1B engine, the sole to power the Boeing 737 MAX. With deliveries suspended since March 2019, Boeing had reduced the production of the 737 MAX by about 20%, with a monthly output of 42 aircraft, against 52 previously.